The American Intellectual Property Law Association (AIPLA) will host its annual Trade Secret Law Summit at the American Express Company in New York City’s Financial District on March 21-22, 2019.

Seyfarth is a proud sponsor of the Summit, at which partners Erik Weibust (Vice Chair of AIPLA’s Trade Secret Law Committee) will be speaking on Protection of Trade Secrets in the Social Media Era,  and moderating a panel on Trade Secrets and Restrictive Covenants in the Financial Services Industry, on which Scott Humphrey will be speaking.  Other Seyfarth attendees will include James Yu, Jeremy Cohen, and Dawn Mertineit.

We hope you can join us there.  For more information and to register, please click here.

Throughout 2017, Seyfarth Shaw’s dedicated Trade Secrets, Computer Fraud & Non-Competes Practice Group hosted a series of CLE webinars that addressed significant issues facing clients today in this important and ever-changing area of law. The series consisted of six webinars:

  1. 2016 National Year in Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets,
    Non-Compete and Computer Fraud Law
  2. Simple Measures for Protecting Intellectual Property and Trade Secrets
  3. Protecting Confidential Information and Client Relationships in the Financial Services Industry
  4. Protecting Your Trade Secrets in the Pharmaceutical Industry
  5. Trade Secret Protection: What Every Employer Needs to Know
  6. Protecting Trade Secrets in the Social Media Age

Continue Reading 2017 Trade Secrets Webinar Series Year in Review

There is no denying that social media continues to transform the way companies conduct business. In light of the rapid evolution of social media, companies today face significant legal challenges on a variety of issues ranging from employee privacy and protected activity to data practices, identity theft, cybersecurity, and protection of intellectual property.

Seyfarth Shaw is pleased to provide you with the 2017–2018 edition of our easy-to-use guide to social media privacy legislation and what employers need to know. The Social Media Privacy Legislation Desktop Reference:

  • Describes the content and purpose of the various states’ new social media privacy laws.
  • Delivers a detailed state-by-state description of each law, listing a general overview, what is prohibited, what is allowed, the remedies for violations, and special notes for each statute.
  • Provides an easy-to-use chart listing on one axis the states that have enacted social media privacy legislation, and on the other, whether each state’s law contains one or more key features.
  • Offers our thoughts on the implications of this legislation in other areas, including trade secret misappropriation, bring your own device issues and concerns, social media discovery and evidence considerations, and use of social media in internal investigations.
  • Concludes with some best practices to assist companies in navigating this challenging area.

How To Get Your Desktop Reference

To request the 2017–2018 Edition of the Social Media Privacy Legislation Desktop Reference as a pdf or hard copy, please click the button below:

In Seyfarth’s final webinar in its series of 2017 Trade Secrets Webinars, Seyfarth attorneys Justin Beyer, Dawn Mertineit, and Ryan Behndleman presented Protecting Trade Secrets in the Social Media Age. The panel focused on how to define and protect trade secrets on social media.

As a conclusion to this well-received webinar, we compiled a summary of takeaways: Continue Reading Webinar Recap! Protecting Trade Secrets in the Social Media Age

Social media and related issues in the workplace can be a headache for employers. There is no denying that social media has transformed the way that companies conduct business. In light of the rapid evolution of social media, companies today face significant legal challenges on a variety of issues, ranging from employee privacy and protected activity to data practices, identity theft, cybersecurity, and protection of intellectual property.

On September 28th at 12:00 p.m. Central, in Seyfarth’s fifth installment in its Trade Secrets Webinar Series, Seyfarth attorneys Justin Beyer, Ryan Behndleman, and Dawn Mertineit will discuss the relationship between trade secrets and social media.

The panel will specifically address the following topics:

  • The interplay between social media privacy laws and workplace investigations and how developing internal company policy and/or contracts can protect company assets
  • Defining, understanding, and protecting trade secrets in social media
  • How courts are interpreting ownership of social media accounts and whether social media sites constitute property
  • How to prevent trade secret misappropriation or distribution through social media channels
  • The interplay between protection of company information and ownership of company accounts in the social media age

Please join us for this informative webinar.

As the social media landscape continues to evolve rapidly, Trading Secrets is committed to keeping pace with this evolution in order to provide the most value for our readers. Regular blog contributors Erik Weibust and Dawn Mertineit, both attorneys in Seyfarth’s Trade Secrets Practice, serve as the Trading Secrets “social media directors” and will be actively monitoring the social media outlets for the blog, including Twitter, Facebook, Google+, Tumblr, YouTube, and LinkedIn.

We will continue to educate about news and legislation relating to trade secrets, non-competes, computer fraud, privacy and social media. Through our social media accounts, Erik and Dawn engage directly with influencers in our industry/area of expertise, share content with them, and stay active in conversations through various social media platforms — all with a focus on sharing items that are of value to our audience. We encourage our readers to engage in the conversation as well!

By Robert Milligan and Joshua Salinas

As part of our annual tradition, we are pleased to present our discussion of the top 10 developments/headlines in trade secret, computer fraud, and non-compete law for 2013. Please join us for our complimentary webinar on March 6, 2014, at 10:00 a.m. P.S.T., where we will discuss them in greater detail. As with all of our other webinars (including the 12 installments in our 2013 Trade Secrets webinar series), this webinar will be recorded and later uploaded to our Trading Secrets blog to view at your convenience.

Last year we predicted that social media would continue to generate disputes in trade secret, computer fraud, and non-compete law, as well as in privacy law.  2013 did not disappoint with significant social media decisions involving the ownership of social media accounts and “followers” and “connections,” as well as cases addressing liability or consequences for actions taken on social media, such as updating one’s status, communicating with “restricted” connections, creating fake social media accounts, or deleting one’s account during pending litigation.

We also saw more states (e.g., Arkansas, Utah, New Mexico, California, Colorado, Nevada, Michigan, New Jersey, Oregon, and Washington) enact legislation to protect employees’ “personal” social media accounts and we expect more states to follow.

The circuit split regarding the interpretation of what is unlawful access under the Computer Fraud and Abuse Act (“CFAA”) remains unresolved and another case will need to make its way up to the Supreme Court or legislation passed to clarify its scope as federal courts continue to reach differing results concerning whether employees can be held liable under for violating computer use or access policies.

There have also been several legislative efforts to modify trade secret, computer fraud, or non-compete law in various jurisdictions.  Texas adopted a version of the Uniform Trade Secrets Act, leaving Massachusetts and New York as the lone holdouts. Oklahoma passed legislation expressly permitting employee non-solicit agreements. Massachusetts, Michigan, Illinois, New Jersey, Maryland, Minnesota, and Connecticut considered bills that would provide certain limitations on non-compete agreements but they were not adopted.

We expect more legislative activity in 2014, particularly regarding privacy, the scope of the CFAA, and trade secret legislation to curb foreign trade secret theft and cyber-attacks.

Finally, while the Snowden kerfuffle and NSA snooping captured the headlines in 2013, government agencies remained active, including some high profile prosecutions under the Economic Espionage Act, the release of the Obama Administration’s Strategy on Mitigating the Theft of U.S. Trade Secrets,  and the National Labor Relations Board’s continued scrutiny of employers’ social media policies. We expect more government activity in this space in 2014.

Here is our listing of top developments/headlines in trade secret, computer fraud, and non-compete law for 2013 in no particular order:

1)         Dust Off Those Agreements . . . Significant New Non-Compete Cases Keep Employers On Their Toes

Employers were kept on their toes with some significant non-compete decisions which forced some employers to update their agreements and onboarding/exiting practices. First, in Fifield v. Premier Dealer Services, an Illinois appellate court found that less than two years employment is inadequate consideration to enforce a non-compete against an at-will employee where no other consideration was given for the non-compete. Second, in Dawson v. Ameritox, an Alabama federal court found that a non-compete executed prior to employment was unenforceable. Next, in Corporate Tech. v. Hartnett, a Massachusetts federal court held that initiating contact was not necessary for finding solicitation in breach of a customer non-solicitation agreement. Lastly, in Assurance Data v. Malyevac, the Virginia Supreme Court found that a demurrer (i.e., a pleading challenge) should not be used to determine the enforceability of non-compete provisions but rather evidence should be introduced before making such a determination.

2)         Continued Split of Authority On the Computer Fraud and Abuse Act and Efforts to Reform CFAA and Enhance Federal Trade Secret and Cybersecurity Law

Courts in Massachusetts, Minnesota, and New York joined the Ninth Circuit’s narrow reading of the CFAA and limited its applicability to pure hacking scenarios rather violations of employer computer usage or access policies. Additionally, in 2013, Representative Zoe Lofgren introduced Aaron’s Law, named after the political hackvist Aaron Swartz, to reform of the Computer Fraud and Abuse Act. Her proposed legislation would limit the CFAA to pure hacking scenarios and exclude violations of computer usage policies and internet terms of service from its scope. Lofgren also introduced legislation which would create a federal civil cause of action in federal court for trade secret misappropriation. Other legislation to prevent intellectual property theft was also introduced including the Deter Cyber Theft Act, which aims to block products that contain intellectual property stolen from U.S. companies by foreign countries from being sold in the United States. The Cyber Economic Espionage Accountability Act was also introduced and allows U.S. authorities to “punish criminals backed by China, Russia or other foreign governments for cyberspying and theft.” We expect Congress to consider similar legislation in 2014.

3)         Texas Adopts Uniform Trade Secrets Act

Texas joined forty-seven other states in adopting some version of the Uniform Trade Secrets Act. Until recently, Texas common law governed misappropriation of trade secrets lawsuits in Texas. The new changes under the Texas UTSA (which we discuss in more detail here) provide protection for customer lists, the ability to recover attorneys’ fees, a presumption in favor of granting protective orders to preserve the secrecy of trade secrets during pending litigation, and that information obtained by reverse engineering does not meet the definition of a trade secret.  Legislation has been introduced in Massachusetts to adopt the Act but has yet to pass. For additional information on recent trade secret and non-compete legislative updates, check out our webinar “Trade Secrets and Non-Compete Legislative Update.”

4)         High Profile Prosecutions and Trials under Computer Fraud and Abuse Act and Economic Espionage Act

2013 saw several high profile prosecutions and trials under the CFAA and Economic Espionage Act. Bradley Manning, who allegedly leaked confidential government documents, to WikiLeaks, and Andrew ‘Weev’ Auernheimer, who allegedly hacked AT&T’s servers, were both convicted under the CFAA. Executive recruiter David Nosal was convicted by a San Francisco jury of violating federal trade secret laws and the CFAA and sentenced to one year and a day in federal prison.  In U.S v. Jin, the Seventh Circuit upheld the conviction of a Chicago woman sentenced to four years in prison for stealing trade secrets of her employer before boarding a plane for China. For additional information on criminal liability for trade secret misappropriation, check out our webinar “The Stakes Just Got Higher: Criminal Prosecution of Trade Secret Misappropriation.”

5)         More Social Media Privacy Legislation

Arkansas, Utah, New Mexico, Colorado, Nevada, Michigan, New Jersey, Oregon, and Washington all passed legislation social media privacy legislation in 2013 that prohibited employers from asking or insisting that their employees provide access to their personal social networking accounts. California extended its current social media privacy law to specify that it encompassed public employers.  We expect more states to enact social media privacy legislation in 2014.

6)         Continued Uncertainty on the Scope of Trade Secret Preemption

Courts have continued struggled with the scope and timing of applying preemption in trade secret cases but there is a growing movement to displace common law tort claims for the theft of information. Such claims are typically tortious interference with contract, conversion, unfair competition, and breach of fiduciary duty. In essence, plaintiffs may only be left with breach of contract and a trade secret claim for the theft of information if a jurisdiction has adopted a broad preemption perspective. Courts in western states such as Arizona, Hawaii, Nevada, Utah, and Washington have preempted “confidential information” theft claims under their respective trade secret preemption statutes.

In K.F. Jacobsen v. Gaylor, an Oregon federal court, however, found that a conversion claim for theft of confidential information was not preempted. In Triage Consulting Group v. IMA, a Pennsylvania federal court permitted the pleading of preempted claims in the alternative. Additionally, in Angelica Textile Svcs. v. Park, a California Court of Appeal found that there was no preemption of claims for breach of contract, unfair competition, conversion, or tortious interference because the claims were based on facts distinct from the trade secret claim and the conversion claim asserted the theft of tangible documents. In contrast, in Anheuser-Busch v. Clark, a California federal court found that a return of personal property claim based on the taking of “confidential, proprietary, and/or trade secret information” was preempted because there was no other basis beside trade secrets law for a property right in the taken information. For additional information on the practical impact of preemption on protecting trade secrets and litigating trade secret cases, check out our webinar “How and Why California is Different When it Comes to Trade Secrets and Non-Competes.”

7)         Growing Challenge of Protecting of Information in the Cloud with Increasing Prevalence of BYOD and Online Storage

While the benefits of cloud computing are well documented, the growth of third party online data storage has facilitated the ability for rogue employees to take valuable trade secrets and other proprietary company electronic files, in the matter of minutes,  if not seconds. The increasing use of mobile devices and cloud technologies by companies both large and small is likely to result in more mobile devices and online storage being relevant in litigation. A recent article in The Recorder entitled “Trade Secrets Spat Center on Cloud,” observed that the existence of cloud computing services within the workplace makes it “harder for companies to distinguish true data breaches from false alarms.”

An insightful Symantec/Ponemon study on employees’ beliefs about IP and data theft was released in 2013. It surveyed 3,317 employees in 6 countries (U.S., U.K., France, Brazil, China, South Korea). According to the survey, 1 in 3 employees move work files to file sharing apps (e.g. Drop Box). Half of employees who left/lost their jobs kept confidential information 40% plan to use confidential information at new job. The top reasons employees believe data theft acceptable: (1) does not harm the company does not strictly enforce its policies; (2) information is not secured and generally available; or (3) employee would not receive any economic gain.  The results of this study serve as a reminder that employers must be vigilant to ensure that they have robust agreements and policies with their employees as well as other sound trade secret protections, including employee training and IT security, to protect their valuable trade secrets and company data before they are compromised and stolen. Employers should implement policies and agreements to restrict or clarify the use of cloud computing services for storing and sharing company data by employees. Some employers may prefer to simply block all access to such cloud computing services and document the same in their policies and agreements. For a further discussion about steps and responses companies can take when their confidential information and/or trade secrets appear, or are threatened to appear, on the Internet, check out our webinar “My Company’s Confidential Information is Posted on the Internet! What Can I Do?

8)         Continued Significance of Choice of Law and Forum Selection Provisions In Non-Compete and Trade Secret Disputes

The U.S. Supreme Court’s recent decision in Atlantic Marine v. U.S.D.C. for the W.D. of Texas appears to strengthen the enforceability of forum selection clauses as it held that courts should ordinarily transfer cases pursuant to applicable and enforceable forum selection clauses in all but the most extraordinary circumstances. While Atlantic Marine did not concern restrictive covenant agreements or the employer-employee context, it may nonetheless make it more difficult for current and/or former employees to circumvent the forum selection clauses contained in their non-compete or trade secret protection agreements. Many federal courts continue to enforce out-of-state forum selection clauses in non-compete disputes (see AJZN v. Yu and Meras Eng’r’g v. CH2O), while some courts have disregarded forum selection clauses in such disputes “in the interests of justice.”  The Federal Circuit in Convolve and MIT v. Compaq and Seagate, held that information at issue lost its trade secret protection when the trade secret holder disclosed the information because it failed to comply with the confidential marking requirement set forth in a non-disclosure agreement. Accordingly, trade secret holders should be careful what their non-disclosure agreements say about trade secret protection otherwise they may lose such protection if they fail to follow such agreements.

9)         Social Media Continues to Change Traditional Legal Definitions and Analyses  

Social media continues to change the way we define various activities in employment, litigation, and our everyday lives. A Pennsylvania federal district court in the closely watched Eagle v. Morgan case found that a former employee was able to successfully prove her causes of action against her former employer for the theft of her LinkedIn account, but she was unable to prove damages with reasonable certainty. Recent cases in Massachusetts and Oklahoma held that social media posts, updates and communications with former customers did not violate their non-solicitation restrictive covenants with their former employer. In the litigation context, a  New Jersey federal court issued sanctions against a litigant for deleting his Facebook profile, while a New York federal court allowed the FTC to effectuate service of process on foreign defendants through Facebook. The Fourth Circuit held that “liking” something on Facebook is “a form of free speech protected by the First Amendment.” Federal district courts in Nevada and New Jersey illustrated the growing trend of courts finding that individuals may lack a reasonable expectation of privacy in social media posts. For further discussion on the relationship between social media and trade secrets, check out our webinar “Employee Privacy and Social Networking: Can Your Trade Secret Survive?

10)       ITC Remains Attractive Forum to Address Trade Secret Theft

The Federal Circuit caught the attention of the ITC and trade secret litigators alike when it ruled in TianRui Group Co. v. ITC that the ITC can exercise its jurisdiction over acts of misappropriation occurring entirely in China. Since then, victims of trade secret theft by foreign entities are increasingly seeking relief from the ITC (e.g. In the Matter of Certain Rubber Resins and Processes for Manufacturing Same (Inv. No. 337-TA-849)). For valuable insight on protecting trade secrets and confidential information in China and other Asian countries, including the effective use of non-compete and non-disclosure agreements, please check out our recent webinar titled, “Trade Secret and Non-Compete Considerations in Asia.“

We thank everyone who followed us this year and we really appreciate all of your support. We also thank everyone who helped us make the ABA’s Top 100 Law Blogs list. We will continue to provide up-to-the-minute information on the latest legal trends and cases across the country, as well as important thought leadership and resource links and materials.

Don’t forget to register to receive a copy of our Annual Blog Year in Review.

Social media clearly has numerous uses and benefits, as hundreds of millions of users worldwide can attest. From connecting with a long lost friend, to marketing a new product or service, to organizing a high school reunion or even an uprising in the Middle East, social media has become a ubiquitous part of our lives. But its rapid proliferation comes with risks.

In addition to the hazards to individuals on which the media regularly reports — invasion of privacy, harassment, bullying and the like — the increased risks to employers are just as compelling, albeit perhaps not as sensational. Most employers today have implemented social media policies that govern such things as if and when employees may access social media during the workday and appropriate uses thereof, but many companies fall short in protecting their trade secrets and customer relationships or goodwill.

Employees, especially younger ones, may unwittingly put their employers at risk simply by connecting with customers and/or vendors on LinkedIn, or by boasting about their latest achievements on Facebook or Twitter. Or they may be using social media intentionally to solicit customers or employees after termination.

As the line between business and personal information becomes increasingly blurred, employers must be cognizant of the risks inherent with the increased use of social media and take affirmative steps to protect their trade secrets and customer relationships before it is too late. Once a trade secret has been disclosed, its protections cannot be recovered; and once a customer leaves, he or she may never return.

 Setting Expectations

The most basic step that any employer should take to protect itself is to set expectations for its employees. In addition to creating the kind of culture where employees want to be protective of their employer, this can be accomplished by implementing policies that limit what employees are permitted to post on social media, and the security or privacy measures that must be put in place if they do so.

For instance, subject to the strictures of the National Labor Relations Act, employees should not be permitted to comment publicly on confidential projects or issues, even if they believe it is only to their “small” group of friends. While this is universally true, any policy should explicitly reference social media. Moreover, if employees are permitted to connect with customers and vendors on LinkedIn, their list of contacts should be set to private so that other LinkedIn users cannot view them. This type of policy is the building block for all others, and it isn’t enough simply to have such a policy in place; it must clearly and repeatedly be explained to employees, and perhaps even be the subject of an annual training.

While most employers have confidentiality and nondisclosure policies and agreements in place, they oftentimes do not specify that customer contact information, preferences, and the like that are maintained on LinkedIn and other social media sites fall within the strictures thereof. These policies and agreements should require that such information be deleted immediately from the employees’ accounts if they leave the company for any reason (just as hard copy customer lists must be returned or destroyed).

Although potentially difficult to enforce on their own, absent evidence of misappropriation or improper solicitation, policies such as this can influence a court’s opinion of a noncompliant former employee and add support to a request for injunctive relief should litigation be initiated. Of course, one purpose of these policies is to set clear expectations so as to avoid the need for litigation in the first place.

Who “Owns” Social Media?

Once employee expectations are established, the next thing an employer should do is assert an ownership interest over social media accounts and content, even if that content is already identified as confidential and must be deleted when the employment relationship ends. Few courts have addressed the issue of who “owns” social media. It is a difficult issue because accounts are often free and employees have already joined at the time of hire. Employers should, at the very least, have policies in place that inform employees that the company owns any content that was developed on the job or using the employer’s resources or confidential information.

For instance, the policy should be clear that customer information and goodwill are the company’s property even if posted on an employee’s LinkedIn account. (This policy must go hand in hand with the confidentiality policies discussed above or it will be ineffective.) There will always be disputes over whose goodwill it actually is, and social media ownership policies will certainly not be enforced by every court under every set of circumstances, but it is better to implement such a policy than face the risks of not doing so.

Last year, in Eagle v. Morgan, a federal court in Pennsylvania ruled that a company could not assume its former CEO’s LinkedIn account after she was terminated because although the company had expressed “an intense interest in the issue involving ownership of LinkedIn accounts,” it was clear that on the date the CEO was terminated “no policy had been adopted to inform the employees that their LinkedIn accounts were the property of the employer.” Had the company implemented such a policy, the outcome may have been different.

On the flip side, in Ardis Health LLC v. Nankivell, a federal court in New York ruled that a former employee must turn over the login, password and other access information to several websites, blogs, and social media pages that she had created and maintained for her former employer, because the employee had signed an agreement at the outset of her employment that all work created or developed by her “shall be the sole and exclusive property of [the employer], in whatever stage of development or completion,” and that she must return all confidential information upon request. The existence of such an agreement in this instance protected the company.

Where there is no policy or agreement, a court may leave the question of ownership to a jury, which is not a good result for employers, as jurors will not want to believe that their employers can appropriate or monitor their social media accounts. In PhoneDog v. Kravitz, a federal court in California denied a former employee’s motion to dismiss claims by his employer, alleging that the former employee unlawfully continued using the company’s Twitter account after he quit. There was no policy or agreement in place in this case, and the ultimate outcome will necessarily turn on who actually owns the Twitter account.

Similarly, in Christou v. Beatport LLC, the plaintiff claimed that a former employee misappropriated its trade secrets, including login information for profiles on MySpace and lists of MySpace “friends.” The defendants argued that a list of MySpace friends “is broadcast to the public via the Internet and thus cannot be considered a trade secret.” A federal court in Colorado denied the defendant’s motion to dismiss, holding that whether the information was a trade secret is a factual issue, but opined that:

Social networking sites enable companies … to acquire hundreds and even thousands of “friends.” These “friends” are more than simple lists of names of potential customers. “Friending” a business or individual grants that business or individual access to some of one’s personal information, information about his or her interests and preferences, and perhaps most importantly for a business, contact information and a built-in means of contact. Even assuming that employees generally knew the names of all of the “friends” on [the former employer’s] MySpace pages, it is highly unlikely, if not impossible, that employees knew the contact information and preferences of all those on the “friends” list from general experience.

This is an evolving area of law, and information that was protectable 10 years ago may not necessarily be protectable today.

In Sasqua Group Inc. v. Courtney, a federal court in New York ruled that LinkedIn connections and Facebook relationships with clients cultivated by a former employee were not trade secrets belonging to the firm because although that information “may well have been a protectable trade secret in the early years of [the company’s] existence when greater time, energy and resources may have been necessary to acquire the level of detailed information to build and retain the business relationships at issue … for good or bad, the exponential proliferation of information made available through full-blown use of the Internet and the powerful tools it provides to access such information [now] is a very different story.”

While this case is a classic example of bad facts making bad law, having policies in place at the very least sets expectations for employees, and at best it could carry the day in court.

Beware of Overreach

When implementing policies and agreements related to social media, employers must beware not to infringe upon employees’ rights under state or federal law, including the National Labor Relations Act, which safeguards employees’ right to engage in “protected concerted activities,” Additionally, many states have now enacted or proposed some form of social media privacy laws, some of which prohibit employers from requiring employees or applicants to disclose login information to social media accounts and retaliating against those who refuse to do so.

Employers must also ensure that their own conduct does not run afoul of any laws, including the federal Stored Communications Act, which prohibits the unauthorized access of electronic communications and has been applied to social media. Earlier this year, in Ehling v. Monmouth-Ocean Hospital Service Corp., a federal court in New Jersey held that an employee’s Facebook posts were protected by the Act because she had configured her privacy settings to restrict posts to her “friends” (but found that the employer had not violated the act by viewing the employee’s wall, because a co-worker, who was one of her Facebook friends, showed the post to their employer).

Similarly, in Maremont v. Susan Fredman Design Group Ltd., a federal court in Illinois refused to grant summary judgment to an employer on claims brought by an employee alleging that it had illegally accessed her Twitter and Facebook accounts while she was on medical leave, finding that there were factual disputes as to whether the employer exceeded its authority in accessing those accounts.

Legal issues aside, most employers do not want to create a culture where their employees are constantly in fear of being monitored, which will harm morale and decrease loyalty. This can have the exact opposite effect of what the policies are intended to promote, as disgruntled or disloyal employees are the most likely to take actions harmful to the company.

What Constitutes Solicitation on Social Media?

Regardless of what policies and agreements are implemented, employers must typically still establish that a former employee misappropriated trade secrets and/or improperly solicited customers or employees to obtain relief. The lines are not as clear as they were in the past, however. Does “friending” a customer on Facebook constitute solicitation? Updating one’s LinkedIn account to identify a new employer? Tweeting how great a new employer’s product or service is? These questions largely remain open and have not been addressed in most jurisdictions.

In fact, recent research has uncovered no published decisions in the employment context regarding what constitutes improper solicitation using LinkedIn, the most prolific business-centric social media site that has more than 225 million users worldwide.

However just last month, a Massachusetts court issued an unreported decision in KNF&T Staffing Inc. v. Muller, holding that updating a LinkedIn account to identify one’s new employer and to list generic skills does not constitute solicitation. In this rather narrow decision, the court did not address whether a LinkedIn post could ever violate a restrictive covenant, and several other cases involving this issue settled before it could be resolved.

Outside of the employment context, the Court of Appeals of Indiana, in Enhanced Network Solutions Group Inc. v. Hypersonic Technologies Corp., held that a nonsolicitation agreement between a company and its vendor was not violated when the vendor posted a job publicly on LinkedIn and an employee of the company applied and was hired for the position, because all major steps that led to the employment were initiated by the employee.

In the context of Facebook, a Massachusetts court ruled in Invidia LLC v. DiFonzo that a hairstylist did not violate her nonsolicitation provision by “friending” her former employer’s customers on Facebook because “one can be Facebook friends with others without soliciting those friends to change hair salons, and [plaintiff] has presented no evidence of any communications, through Facebook or otherwise, in which [defendant] has suggested to these Facebook friends that they should take their business to her chair.”

Likewise, in Pre-Paid Legal Services Inc. v. Cahill, a former employee posted information about his new employer on his Facebook page “touting both the benefits of [its] products and his professional satisfaction with [it]” and sent general requests to his former co-employees to join Twitter. A federal court in Oklahoma denied his former employer’s request for a preliminary injunction, holding that communications were neither solicitations nor impermissible conduct under the terms of his restrictive covenants.

In sum, common sense continues to reign supreme in determining what constitutes solicitation in the age of social media, and if it looks, tastes and smells like solicitation, it probably is. Nevertheless, it is imperative that employers protect their trade secrets and goodwill by setting clear expectations and implementing policies and agreements that clearly express those expectations and provide a means by which to enforce them if necessary.

Judge Thomas P. Billings, of the Massachusetts Superior Court’s Business Litigation Session, recently declined to issue a preliminary injunction in a non-compete case brought by KNF&T Staffing, Inc. against its former employee, Charlotte Muller, who had left to join a competitor. Among other things, KNF&T alleged that Muller had updated her profile on LinkedIn to reflect her new position, “resulting in notification to all of Muller’s 500+ LinkedIn contacts, including the numerous contacts she established during, and which were related to, her employment at KNF&T.” Judge Billings rejected the argument, however, noting that her new firm does not compete with KNF&T in certain industries:

Quite simply, Muller was not and is not prohibited from soliciting or accepting any potential client – whether or not it is a present client of KNF&T – for recruitment of IT professionals, or anyone else in a field in which KNF&T does not recruit.

Judge Billings also noted that the same reasoning would apply to Muller’s LinkedIn activities, where she listed only generic skills and responsibilities including “internet recruiting,” “temporary staffing,” “staffing services” and “recruiting”:

There is no more specific mention of any of KNF&T’s “Fields of Placement” than this. So long as Muller has not and does not . . . solicit or accept business in the Fields of Placement for herself or others . . . she will not have violated the covenant not to compete.

The decision is rather narrow, however, and the Court did not address whether a social media post could ever violate a restrictive covenant. As we have previously noted – in a blog posting from which Massachusetts Lawyers Weekly quoted extensively in an article about this case – the issue remains unresolved and decisions like the one issued by Judge Billings are at the forefront of this burgeoning area of law.

On a separate issue, whether a material change in Muller’s employment voided her non-compete agreement, the Court assumed, but did not rule, “that Muller’s promotions, and the corresponding increases in responsibility and compensation, did not constitute an abandonment of the covenant” under F.A. Bartlett Tree Expert Co. v. Barrington, 353 Mass. 585, 587-88 (1968). We have previously blogged about this issue as well, which also remains unresolved (as Judge Billings points out in a footnote).

We will continue to monitor the state of the law with respect to both of these issues and will report on any relevant decisions. Check in frequently or subscribe to our blog now for updates.

LinkedIn is the biggest professional networking site in the world.  It has more than 225 million users in more than 200 countries and territories.  Approximately 75 million users are in the United States.  Many of those users have signed non-solicitation agreements with their employers prohibiting them from soliciting the employers’ customers and workers.  Unfortunately, many of those non-solicitation agreements are not well-suited to address somewhat unique solicitation issues related to LinkedIn usage.

This article is intended to highlight some inherent problems associated with attempting to govern post-employment LinkedIn activity through traditional non-solicitation agreements, and to encourage employers to review and revise such agreements to better address issues posed by LinkedIn usage.  While this article focuses on LinkedIn, similar issues arise from employees’ use of other social networks. 

The potential problem with traditional non-solicitation provisions and LinkedIn activity:

Many employers require their employees to sign agreements containing non-solicitation provisions prohibiting employees from soliciting the employers’ workers and customers after termination of their employment.  By way of example, a basic provision may look something like this:

Employee agrees that during his/her employment with the company and for one (1) year after any termination of his/her employment, Employee will not directly or indirectly solicit or attempt to solicit, divert or hire away any person employed by the Company or any customer of the Company.

While this type of non-solicitation provision may do a reasonably good job of addressing the traditional solicitation scenario (setting aside potential enforceability issues), LinkedIn poses a number of challenges for which traditional provisions are not necessarily a good fit. 

Consider, for example, what may happen when an employee leaves company X to go to work for company Y, a direct competitor to company X, and updates his LinkedIn profile to reflect his new position with company Y.  In simplified terms, a number of things are likely to occur.  First, the departed employee’s contacts will automatically get an “update” on their LinkedIn home page indicating that the departed employee has a new job and suggesting that they “congratulate” the employee.  Second, when the departed employee posts any messages, including messages about company Y, those messages will be automatically delivered to the employee’s contacts on their LinkedIn home pages.  Third, similar information may also be included in e-mails LinkedIn automatically sends to its users on a regular basis about their contacts.  Fourth, the departed employee may send messages through LinkedIn to individual recipients just like regular e-mail.  Finally, the departed employee may seek to “connect” with the former employer’s employees and customers through LinkedIn.

The above examples illustrate some of the special problems associated with LinkedIn in the non-solicitation context.  By a simple profile update, the departing employee’s entire network of contacts is immediately and automatically informed that the employee has left company X and is now working at company Y.  Similarly, the departing employee may effortlessly push information about company Y to his contact network, including, potentially the former employer’s employees and customers.  While in this largely automated process, a departing employee may not have any intent to solicit anyone, it is easy to see how an employer may have various degrees of discomfort with some or all of the above things depending on the type of activity, the message, the target audience and the employer’s overall sensitivity to solicitation issues.  The question is what activity a court will find to be in violation of a non-solicitation provision. 

Case law provides little guidance for when LinkedIn activity violates non-solicitation provisions:

A few years ago, our firm represented an employer in an employee and customer “raiding” case. Departing employees were alleged to have violated non-solicitation provisions by soliciting former co-workers to work for their new employer and to take the former employer’s customers with them.  In addition to more traditional violations of the non-solicitation provisions, there were potential violations where some of the departing employees’ former co-workers and customers received information through LinkedIn from some departing employees attempting to hype their new employer.  While annoying to the former employer, it was not clear whether the contents of the messages actually constituted “solicitations” as prohibited by the non-solicitation provisions.  It was also unclear whether the messages were specifically targeted at former co-workers or customers, or if all the departing employees’ LinkedIn contacts received the same messages.  At the time, it seemed like an interesting issue of first impression.  Unfortunately, the case settled before the court addressed whether the former employees’ LinkedIn activity violated their non-solicitation agreements. 

A few more recent cases have also involved allegations of impermissible LinkedIn solicitations.  For example, in TEKSystems v. Hammernick, a 2010 case filed in U.S. District Court for the District of Minnesota, TEKSystems filed suit against its former employee Hammernick for violating an agreement not to solicit TEKSystem’s employees and customers to go to its competitors.  Hammernick allegedly violated the agreement by communicating with TEKSystems employees via LinkedIn.  Unfortunately, this case also settled without resolving the issue of when LinkedIn activity constitutes an impermissible solicitation. 

Similarly, in Graziano v. NESCO Service Company, No. 1:09CV2661, 2011 U.S. Dist. LEXIS 33497 (N.D. Ohio Mar. 4, 2011), NESCO alleged that its former employee, Graziano, violated a severance agreement and non-solicitation provision which prohibited him from soliciting NESCO’s employees.  After Graziano was terminated, he set up a LinkedIn account and contacted some NESCO employees.  NESCO sent a cease and desist letter to Graziano, alleging that his conduct violated the non-solicitation provision.  When Graziano refused to stop his conduct, NESCO stopped paying severance benefits and Graziano filed suit against NESCO.  This case also settled without addressing whether the LinkedIn activity violated the non-solicitation agreement.

Presumably, there have been other disputes involving LinkedIn and non-solicitation agreements.  However, research has not uncovered any published court decisions specifically addressing when LinkedIn activity may violate a non-solicitation agreement.

 Considering LinkedIn activity in drafting non-solicitation agreements:

Given the special challenges posed by LinkedIn activity in the non-solicitation context and the dearth of cases addressing the issue, employers are wise to carefully consider how they want to handle their employees’ use of LinkedIn. 

In addition to customary and traditional non-solicitation provisions, employers would be wise to work with attorneys to consider specific provisions addressing how they want departing employees to conduct themselves with respect to LinkedIn accounts and post-employment activity.  Such provisions may include a combination of: (1) specifying the employer’s ownership of LinkedIn accounts and contacts; (2) requiring departing employees to delete LinkedIn accounts, or to relinquish control over accounts to their former employers; (3) imposing limits on employees’ contacts with co-workers and customers through LinkedIn; (4) requiring departing employees to delete LinkedIn contacts with co-workers and customers; and (5) requiring departing employees not to establish or re-establish such contacts through LinkedIn.

At the same time, employers must be mindful of the risk of violating employees’ rights, including under the National Labor Relations Act and applicable state laws.  Provisions that restrict employees’ mobility may not be enforceable, and courts may impose liability for requiring employees to enter into invalid agreements as a condition of employment.  For these reasons, and given the uncertainty of the law, employers would be wise to include severance clauses in their agreements in the event any particular provision is held to be invalid.